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1Q 2018 Earnings Presentation – Approach Resources, Inc.

Approach Resources, Inc. · May 2, 2018 · 26 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 1
    First Quarter 2018 Results MAY 2, 2018
  2. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 2
    Solid foundation for long-term value APPROACH RESOURCES OVERVIEW ASSET OVERVIEW Enterprise value 637 MM1 High-quality reserve base 181.5 MMBoe proved reserves2 WOLFCAMP SHALE RESOURCES PLAY 60% liquids, 28% oil 582.2 MM PV-10…
  3. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 3
    Business anchored by long-lived, low-cost proved reserve base Year-end 2017 proved reserves totaled 181.5 MMBoe Reserve replacement ratio of 748% of produced reserves1 Total proved reserves up 16% YoY, proved PV-10 (non-GAAP) of 521…
  4. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 4
    Strong track record of efficiently managing through price cycles Production Growth Reserve Growth 16.0 200 180 14.0 160 12.0 140 10.0 120 MBOE MMBOE 8.0 100 80 6.0 60 4.0 40 2.0 20 0.0 0 NG Liquid NG…
  5. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 5
    First quarter 2018 and other highlights Revenue up 9% over first quarter prior year Reaffirmed borrowing base of 325 million, completed on May 1, 2018 Produced 1,020 MBoe, or 11.3 MBoe/day in line with guidance Daily oil…
  6. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 6
    First quarter 2018 well results Production Normalized to a 7,500' lateral and for operational downtime First Quarter 2018 Results May 2, 2018 7
  7. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 7
    First year cumulative production compared to 700 Mboe type curve New completion technique 3 wells completed 5/2017 2 in Project Pangea (B&C) & 1 in Pangea West (A) Average stage spacing 174 2,000 lbs./ft. average sand…
  8. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 8
    Pangea West science well First year cumulative production as compared to 700 MBOE type curve Production Normalized to a 7,500' lateral and for operational downtime First Quarter 2018 Results May 2, 2018 9
  9. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 9
    Strong recent well performance and risk of wide gas basis differentials support redeploying drilling capital from Project Pangea to Pangea West Illustrative type curve IRRs Historical (0.35)/Mcf Assumed (1.75)/Mcf gas differential gas…
  10. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 10
    2018 operational activity forecast 1 2018 Completion Schedule 2018 Highlights Q1 Activity: Completed 4 wells 2 Pangea outperforming 700 Mboe type curve 6 2 Pangea West in post-frac flowback and clean up 2018 organic oil growth of…
  11. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 11
    Approach continues to achieve one of the lowest cost structures while increasing well EUR in the Permian Basin AREX D&C Historical Track Record ( MM) and Well EUR (MBOE) 50% reduction in well cost 55% improvement in EUR since 2011…
  12. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 12
    Centralized infrastructure drives capital and operating efficiencies Receipt Point Reagan Irion PANGEA WEST PW Receipt Point Crockett Schleicher DCP Tap PW BLK 50 Receipt Point CS 1 Compressor 228HA Receipt 204HA Point…
  13. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 13
    AREX is benefiting from commodity price appreciation Unhedged realized prices ( per Boe) Q1 2018 Production Commodity Mix 70.00 27% 60.00 39% 50.00 34% 40.00 Oil NGLs Natural Gas Balanced production mix creates 30.00…
  14. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 14
    LOE cost reductions driven by water handling infrastructure and field-level operating efficiencies AREX LOE Historical Track Record (/Boe) 1st Qtr. 2018 LOE driven by lease 7.00 maintenance, winter related 6.48 expenditures and…
  15. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 15
    Balance sheet detail at March 31, 2018 AREX Liquidity and Capitalization Borrowing base unanimously reaffirmed at 325 AREX Capitalization as of 3/31/2018 ( MM) million on May 1, 2018 Cash 0.0 Interest coverage ratio of 2.6x, above…
  16. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 16
    Investment Highlights Concentrated geographic footprint in Large scale infrastructure system results in Permian Basin liquids-rich play, 100% sustainable low cost operating expense & operated 149,000 net acres, 181.5 industry leading D&C…
  17. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 17
    Appendix
  18. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 18
    2018 production and expense guidance Annual Guidance Production Guidance: Oil Production (MBbls) 1,150 1,250 NGLs (MBbls) 1,450 1,550 Natural Gas (MMcf) 9,600 10,200 Total 4,200 4,500 Cash operating costs (per Boe): Lease…
  19. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 19
    Current hedge summary Commodity and Period Contract Type Volume Transacted Contract Price Crude Oil April 2018 December 2018 Swap 300 Bbls/day 50.00/Bbl April 2018 June 2018 Collar 500 Bbls/day 55.00/Bbl - 60.00/Bbl April 2018…
  20. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 20
    Enhanced Completion Techniques results in a 37% improvement in well EURs 2Q 2015 4Q 2017 (36 Wolfcamp A, B & C Wells) All wells normalized to 7,500 lateral and for operation downtime First Quarter 2018 Results May 2, 2018 21
  21. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 21
    First Quarter 2018 Results May 2, 2018 22
  22. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 22
    Adjusted net loss (unaudited) The amounts included in the calculation of adjusted net loss and adjusted net loss per diluted share below were computed in accordance with GAAP. We believe adjusted net loss and adjusted net loss per…
  23. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 23
    EBITDAX (unaudited) We define EBITDAX as net loss, plus (1) exploration expense, (2) depletion, depreciation and amortization expense, (3) share-based compensation expense, (4) non-cash fair value loss (gain) on derivatives, (5) gain on…
  24. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 24
    Unhedged cash margin (unaudited) We define unhedged cash margin as revenue, less cash operating expenses. We define cash operating expenses as operating expenses, excluding (1) exploration expense, (2) depletion, depreciation and…
  25. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 25
    PV-10 (unaudited) The present value of our proved reserves, discounted at 10% (PV-10), was estimated at 521 million at December 31, 2017, and was calculated based on the first-of-the-month, twelve-month average prices for oil, NGLs and…
  26. 1Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 26
    Contact information SUZANNE OGLE Vice President Investor Relations & Corporate Communication 817.989.9000 irapproachresources.com www.approachresources.com

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